Off-Plan Vs Secondary Real Estate Market: Which One To Invest In?

Dubai is one of the richest cities in terms of real estate investment opportunities in the world. Whether you are a professional and experienced investor or you are just starting a new chapter of your life as an investor, Dubai is an ideal destination for anyone.

Many renowned development companies are participating in Dubai’s real estate development and playing a pivotal role in developing it as a global real estate hub. Dubai’s real estate market is thriving and is expected to continue growing. It is an attractive destination for investors from all over the world, and it offers a lot of growth opportunities.

Dubai’s real estate market is famous not only for secondary properties but many off-plan projects are the major attractions for investment. Both types of investments have their own sets of benefits and drawbacks. Each type of investment suits investors as per their needs, preferences, personal priorities, and budget.

What are the key features of the secondary and off-plan real estate market? The different benefits and drawbacks of both types of investment are this article’s main highlights. After reading this article, you can make an informed investment decision; on which type of real estate market is more beneficial for you.

Introduction To Off-Plan Properties

Off-plan properties are pre-construction or properties that are under development and not completed. Investment in off-plan projects is more trending over the past few years. Potential investors are showing more interest in these types of properties due to innumerable advantages.

The developers in off-plan projects offer flexible payment plans in which investors have to pay the total amount in different steps. Initially, the investor has to pay 10 to 15% of the total amount so a mega off-plan project is accessible with low investment in hand.

Benefits Of Off-Plan Properties

Off-plan projects in Dubai are trending, beneficial, and exciting opportunities for investors to invest and secure their future. There are numerous advantages of investment in Off-plan projects, some of the benefits are given below:

High Returns On Investment

The major attraction for investors in off-plan projects is high returns or capital appreciation on investment. Initially, these properties may have low market value and less demand during construction or pre-construction but as the project is completed the market value and demand of the property increase and lead to the potential appreciation, and investors receive high returns of investment in off-plan projects.

Flexible Payment Plan and Affordability

The developers of off-plan projects offer flexible payment plans to the investors. They can pay the whole amount in different easy installments. In most of the projects, investors have to pay 10 to 15 % amount during registration or at an early stage, and the remaining amount is payable during construction and after project completion.

Some developers promote their projects by offering to cover some legal costs such as 4% Dubai Land Department Registration fees which is an attraction for many investors.

Brand New Property and Latest Designs

Off-plan projects offer different types of properties including flats, apartments, villas, or townhouses. Another benefit of off-plan projects is that they offer brand-new properties. During the construction of these projects, new technologies are used, and new engineering, ventilation, and increased noise insulation are installed.

Moreover, in off-plan projects, the investors or buyers have the option to customize the property as per their interests, preferences, and needs.

Drawbacks Of Off-Plan Properties

Some disadvantages are also associated with investment in off-plan properties. Here is the list of off-plan properties. An investor can pay the total amount in different installments

Construction Delayed

In off-plan projects, the investor can face the uncertainty in competition of the project. Construction delay is very common in off-plan projects that cause frustration for investors. Sometimes, investors have planned their finances based on the expected completion date of the project and any delay can lead to a financial crunch.

Delayed Rental Income

Off-plan projects cannot be a source of immediate income, these properties cannot be rented out. The investors have to wait until the compilation and market development for high returns and passive income.

Financing Limitations

The investors cannot get the mortgage on the properties that are still under construction, so it is a major financial barrier for investors who are not cash buyers. Even sometimes the payment plans offered by developers are not suitable for investors.

Introduction To Secondary Properties

Secondary properties are defined as properties that are already owned by the owner of the property and the owner of the property looking for another to sell it or to rent it out. In this type of property, investors need heavy investments in hand immediately they have to pay the total amount, if they have decided to buy this property. Secondary properties offer high returns right after your investment, you do not have to wait for months or years like off-plan properties to be completed.

Benefits Of Secondary Properties :

Secondary properties have their own set of advantages and investment in secondary properties is an attraction for many investors. Given below are a few benefits of secondary properties.

Immediate Rental Income

One of the most highlighted benefits of investment in secondary properties is immediate rental income. Secondary properties are the major source of passive income that attracts many investors.

Established Unit And Location

Secondary properties are always located in established communities and prime locations in the city. Secondary properties become more in demand, either for resale or for rental purposes, as a result of this factor. Due to the ideal location of the property, the market value and prices also increase which gives benefits to the investors.

Easy Financing

In secondary properties, the investors are allowed to get a long-term mortgage. This makes it easier to finance the purchase, as the mortgage payments are spread over a longer period. This makes secondary properties an attractive option for investors who are looking for a stable source of income.

Drawbacks Of Secondary Properties

secondary properties have a list of benefits and at the same time, some drawbacks are also considerable before making a final investment decision. Here are some drawbacks of secondary properties.

Renovation Cost

Secondary properties are the used properties and after some duration, these properties need renovation and maintenance. To maintain the stability and property condition, as an owner the investor or buyer has to bear the renovation cost of the property.

Higher Prices

As secondary properties are already established units and ready-to-use properties the prices of such properties are higher compared to off-plan projects. For some investors, these properties are not affordable and it is difficult to pay the whole amount at once.

Limited Customization

Another drawback of secondary properties is limited customization. The investor or buyer is not allowed to customize the property according to his/her choice.

Final Thoughts

Investing in Dubai’s real estate market is a crucial task. Each type of investment has its advantages and disadvantages. As investors, it depends on your decided criteria in which type of property either off-plan or ready property, you want to invest.

There is a risk in investment in each type of property, whether it is off-plan or ready property. We have discussed the pros and cons of both investments, so you can make an informed and wise decision regarding investment as per your investment goals, budget, experience, and risk-taking capacity.

Source: ERE Homes Real Estate